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Local recyclers in turmoil as China closes door on exports

Experts say new purity standards for mixed paper and plastics are impossible to meet, casting pall on multi-billion export sector, and fears about impact on curbside recycling

There are gobs of money to be made from selling and reusing all that paper, plastic and other recyclables that Portlanders stow in roll carts each week and haul out to the curbside.

But with China cracking down on what recyclables it's willing to buy, turmoil has gripped the recycling sector in Portland and across the globe. The crisis potentially affects everything from Port of Portland shipments to Nike shoeboxes to packaging for Chinese-made goods sold by Walmart.

Recent Chinese trade pronouncements caused "the largest single hit" to the recycling industry in four decades, says Jerry Powell, editor and publisher of Resource Recycling, an industry trade journal published in Portland. Prices for mixed recyclable paper plummetted last month more than any single month since data has been kept, Powell says.

So far, the biggest impact locally has been for specialty plastics recycling, the stuff not collected at curbside. Far West Recycling, which offers six Portland-area depots where people have brought Styrofoam and other harder-to-recycle plastics labeled No. 3 through No. 7, recently stopped accepting those, mostly affecting highly motivated recyclers and environmentally minded businesses. New Seasons grocery stores recently stopped accepting all plastics, including small produce bags.

Far West and other area "materials recycling facilities" that buy recyclables to sell overseas have had to deploy more workers to pick through curbside recyclables brought by haulers. They're weeding out more improper materials that gum up machines — such as produce bags — and things that can harm human or environmental health, such as baby diapers and lithium ion batteries. That's causing a slowdown in processing recyclables before they can be baled up and shipped overseas, says Vinod Singh, Far West outreach manager.

Some municipal authorities outside the Portland area, including Hood River and The Dalles, have sought regulatory approval to bury some of their recyclables in a landfill, because it's cheaper than offering them for sale right now, says Peter Spendelow, natural resource specialist for the Oregon Department of Environmental Quality, who focuses on recycling issues.

This whole crisis could blow over if China eases up on what many say are its impossible-to-meet new purity standards for accepting recyclables. But the crisis also could expand, destroying the multibillion-dollar market for mixed-paper exports and even some metals recycling.

"It has the potential to get a lot worse than it is now," Spendelow says.

Lucrative industry

In 2016, the United States sent $5.6 billion worth of recyclables to China, according to the Institute of Scrap Recycling Industries, making it our sixth-largest export there.

China doesn't have a lot of forests or oil, and it's super-cheap to send our recyclables there in shipping container that would otherwise go home empty after manufactured goods are ferried here.

At one point, China bid up scrap paper prices so high that Blue Heron Paper Co. in Oregon City, which used recycled paper to print new paper, closed down in 2011. The mill claimed it couldn't afford to buy the paper — even though much of it originated from curbsides on the West Coast.

In the days when newspapers were the main item recycled, it was relatively easy to assure a pure stream of raw materials to be reused. But then new markets emerged to reuse old plastics and mixed paper, and municipalities started allowing them all to be stowed together in one bin. As a result, the rate of "contaminants" rose.

A recent Metro survey found 8.9 percent of what area residents put in their curbside receptacles don't belong there. For apartment dwellers, the rate jumped to 21 percent. Apparently, many people think hoses and diapers are recyclable.

On the sorting line, Far West got the level of contaminants in recyclables down to roughly 2 to 2.5 percent by weight, Singh says.

China has long had an official standard that contaminants shouldn't top 1.5 percent by weight, Spendelow says, but that wasn't enforced. In 2013, China vowed to get stricter with Operation Green Fence, but it eventually eased up, he says.

In recent years, there's been mounting pressure on Communist Party leaders to address China's staggering pollution problems. Many Chinese, especially women, routinely wear face masks while outdoors to filter out impurities in the air.

In July, China dropped a bombshell on the world recycling industry: its new National Sword standard. Starting in January, the level of contaminants in plastic and paper recyclables it buys must be no more than 0.3 percent. Effectively, that standard is in place now, Powell says, because it can take months to ship products there.

That standard would have such an economic impact that China submitted it to the World Trade Organization, and U.S. officials are contesting it as an unfair barrier to fair trade.

"If this is the bar, nobody's going to get under it," Singh says. Such a purity level is only feasible for something like a bale of newspapers, he says.

"That's going to be a huge challenge," says Bruce Walker, solid waste and recycling program manager for the Portland Bureau of Planning and Sustainability.

To get to that level, recycling wholesalers like Far West would have to hire hundreds of workers to, for example, tear off mailing stickers on envelopes, Powell says.

"In other words, it's a ban," he says, based on a "totally arbitrary number." And there's little transparency behind China's decision-making, and very little written to explain it, he says.

Powell says there are legitimate reasons for China to try to clean up its industry, and why it wants to close down its dirtiest paper and plastics plants. But he suspects the low number is unrealistic, designed more for political reasons perhaps timed with the recent Communist Party congress.

The demand for plastic and paper packaging in China hasn't gone down and can only grow as its middle class continues to expand. Without enough recyclables, it will be an "economic disaster" for China, Powell says, predicting there'll be pressure brought on Communist Party leaders by big Chinese mill owners, and U.S. retailers like Walmart.

He predicts the contaminants standard eventually will rise. For now, though, it's being fought in world trade panels, a process that can take years.

Ultimately, experts say the curbside system may have to be tweaked, with some items barred from the roll carts. Powell predicts that residents will have to pay higher garbage fees to compensate for greater recycling sorting costs.

The Oregon Department of Environmental Quality is convening industry leaders to find solutions, such as finding alternate buyers for plastics and mixed paper.

Curbside recycling not affected

Officials say the situation is very fluid, and they caution residents not to stop recycling. Portland-area curbside programs haven't changed what they're accepting, including higher-value plastics like milk jugs and yogurt tubs. Some grocery stores continue to accept plastic produce bags, which tend to have a domestic market, such as plastic decking made by Trex.

"Keep recycling, but keep the right materials in there," Walker advises.

If any changes are forthcoming for the curbside program, haulers will notify their customers.

DEQ is worried people will stop recycling, especially if they hear that some recyclables are being dumped in the landfill.

So far, it's mainly municipalities in Eastern and Southern Oregon that are considering that, because they have higher transport costs, Spendelow says.

Under state guidelines, if it's cheaper to bury recyclables than sell them, municipalities won't be barred from doing so, though DEQ wants to minimize that. In the tricounty area, where Metro oversees the solid waste system, the rules are different, says Matt Korot, Metro recycling and resource conservation manager.

Metro doesn't allow the same "economic test" to determine whether something is recyclable or not, and has an outright prohibition on disposing of recyclables in landfills, Korot says.